Unpublished Disposition, 851 F.2d 360 (9th Cir. 1983)

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U.S. Court of Appeals for the Ninth Circuit - 851 F.2d 360 (9th Cir. 1983)

George Douglas FAIRHURST, also known as Douglas Fairhurst,Martha Isabel Fairhurst, Plaintiffs-Appellants,v.UNITED STATES of America; U.S. Department of Housing andUrban Development; Samuel Pierce, Secretary of theDepartment of Housing and Urban Development; Robert Fukuda,Area Manager, Department of Housing and Urban Development,Defendants-Appellees.

No. 87-1763.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 18, 1987.Decided June 24, 1988.

Before TANG, CANBY and BRUNETTI, Circuit Judges.


MEMORANDUM* 

The Fairhursts appeal summary judgment for the United States in their Federal Tort Claims Act suit arising out of the foreclosure on and subsequent loss of their HUD-insured home. They primarily challenge, on a variety of theories, HUD's 1976 decision to reject assignment of the Fairhursts' federally-insured mortgage in default, a decision that led to the subsequent foreclosure by the private lender. The Fairhursts also have included a tort claim based on HUD's allegedly negligent inspection of their house during its construction and its negligent delay in obtaining plumbing repair work by the contractor. We affirm.

The district court granted summary judgment based on a number of legal deficiencies in the Fairhursts' complaint and chosen avenues for relief. The Fairhursts' December 23, 1983 complaint in the District Court of Hawaii sought monetary relief from HUD based on grounds of negligence, "lack of jurisdiction" to deprive them of their property, and violations of the fifth amendment and 42 U.S.C. § 1441. (The court liberally construed the claim of a statutory violation to encompass a challenge to HUD's denial of the assignment request). The district court granted summary judgment to the government on the ground of sovereign immunity: (1) it held that the tort challenge to the assignment rejection was barred by the discretionary function exception in 28 U.S.C. § 2680(a); (2) it held that sovereign immunity barred the non-tort bases for challenging the assignment rejection because the only consent to be sued in the National Housing Act (NHA), 12 U.S.C. § 1702, carries the limiting provision that there must be a separate fund under HUD's possession and control from which recovery could be available, and no such fund exists.

The district court denied the Fairhursts' request for a temporary restraining order seeking to prevent HUD from conveying a property in Hawaii to a third party. It held that HUD owed the Fairhursts no duty to convey a comparable property because (1) their claims were barred by sovereign immunity and (2) they had opted out of the class action filed in 1973, Ferrell v. Pierce, 560 F. Supp. 344 (N.D. Ill. 1983).

The court denied reconsideration of its grant of summary judgment on all potential tort theories of liability based on the assignment rejection. It reconsidered its ruling on the statutory challenge in light of the Fairhursts' identification of two possible funds available for payment of damages under 12 U.S.C. § 1702. The court did not decide whether the funds could be used to pay a judgment, but instead held that the Fairhursts did not have a private right of action under the NHA.

The district court permitted the Fairhursts to amend their complaint but emphasized that they would not be permitted to relitigate any issues already resolved. In the amended complaint the Fairhursts claimed (1) that HUD was negligent in refusing to take the assignment; (2) that HUD's failure to promulgate appropriate regulations to implement congressional housing policy caused them to lose their home; (3) that the principal residence requirement was an unconstitutional irrebuttable presumption; and (4) that HUD was negligent in its inspection of the house during construction and in its delay in arranging for plumbing repair work. The Fairhursts sought only a declaratory judgment that HUD's actions were illegal and prayed for injunctive relief to obtain an equivalent property or the equitable remedy of an accounting of profits.

The district court granted summary judgment for the Government. (1) It held that all tort challenges to the denial of assignment had already been decided in the Government's favor. (2) It held that the Fairhursts did not have a cause of action to sue HUD for declaratory or injunctive relief for failure to issue appropriate regulations. (3) It held that the principal residence criterion did not constitute an irrebuttable presumption. (4) It held that the new tort claim based on negligent inspection and delay in repairs did not state a claim for which relief could be granted because under the FTCA only monetary damages are available, and in the amended complaint the Fairhursts sought only injunctive and declaratory relief. (5) It refused to address the Fairhursts' claims regarding HUD's failure to inform them of a reimbursement program for their repair expenses, because the claim was not included in the complaint and because the decision is unreviewable under 12 U.S.C. § 1735b(c).

The Fairhursts timely appeal.

DISCUSSION

The only issues properly before this court are: (1) the constitutionality of the principal residence requirement; (2) the barrier to the claim for negligent inspection and delay in repair; and (3) the denial of the temporary restraining order. The Fairhursts attempt to raise other questions which are not properly before this court. The Fairhursts argue at length about the statute of limitations, upon which the district court did not rule. The Fairhursts also attempt to raise an issue as to the merits of their negligence claims relating to the denial of assignment, but the district court ruled these were barred by sovereign immunity, and the Fairhursts make no attempt to demonstrate that this was error. Finally, the Fairhursts attempt to raise an issue of unconstitutional taking, which was not litigated in the court below.

The Fairhursts also fail to raise issues decided by the district court, and thus waive objection to these rulings. Miller v. Fairchild Industries, Inc., 797 F.2d 727, 738 (9th Cir. 1986). Specifically, the Fairhursts do not challenge (1) the district court's decision that they lacked a cause of action to bring claims challenging assignment denial as violative of the NHA; (2) the district court's holding that the negligence claim based on denial of the assignment is barred by the discretionary function exception to the FTCA, and that sovereign immunity barred claims in the first complaint for monetary damages based on violations of the fifth amendment or 42 U.S.C. § 1441; and (3) the district court's ruling that the claim based on section 518 of the NHA, 12 U.S.C. § 1735b (repair reimbursement program) was not stated in the complaint and was not subject to judicial review in any event.

Whether the principal residence requirement is an irrebuttable presumption of fact in violation of the fifth amendment is a legal question subject to de novo review. United States v. McConney, 728 F.2d 1195, 1201 (9th Cir.) (en banc), cert. denied, 469 U.S. 824 (1984).

The Fairhursts rely on Vlandis v. Kline, 412 U.S. 441 (1973) and United States Dep't of Agriculture v. Murry, 413 U.S. 508 (1973) for their argument that the principal residence requirement constitutes an unconstitutional irrebuttable presumption. Both cases invalidated statutes that conclusively categorized the status of individuals based on presumptions contrary to fact. In Vlandis the statute classified students as out-of-state residents for the duration of their college careers based on their address at the time of their application to college. In Murry the statute created a presumption that individuals were not needy for purposes of food stamp eligibility if they or others in their household were over 18 and were claimed as a dependent by a taxpayer that was not eligible for food stamps.

The district court correctly held that the principal residence requirement in the HUD regulations did not create any similar presumption at all. It was a simple factual requirement. The only thing that might be called a presumption is in fact the definition of principal residence, which includes the concept of occupancy; thus if one did not occupy a residence, as the Fairhursts did not, it could be said that HUD presumed that it was not their principal residence. The irrebuttable presumption analysis of the constitutionality of such a provision has no application in this case.

The district court ruled that the claims for negligent inspection and delay, raised in the second complaint, did not state a claim for which relief could be granted because the second complaint sought only injunctive and declaratory relief and FTCA claims are remediable only through money damages. This is a ruling on a question of law and thus is reviewable de novo. Fort Vancouver Plywood Co. v. United States, 747 F.2d 547, 552 (9th Cir. 1984).

The district court's ruling is correct. It is unclear why the Fairhursts did not seek to amend their second complaint to conform to the requirements of the FTCA but since they did not they have not sought relief available under the FTCA. The Fairhursts do not appear to understand the basis of the district court's ruling, and merely telescope their two complaints, saying they have stated tort claims for which damages are available. This does not address the fundamental defect in their second complaint.

The grant or denial of a preliminary injunction will be reversed only where the district court abused its discretion or based its decision on an erroneous legal standard or on clearly erroneous findings of fact. Colorado River Indian Tribes v. Town of Parker, 776 F.2d 846, 849 (9th Cir. 1985).

The Fairhursts sought to prevent HUD from conveying a property in Hawaii of value equivalent to their home in Guam. The district court ruled that because their claims were all barred by sovereign immunity and they had opted out of the Ferrell class there was no basis for ordering HUD to retain a property for eventual conveyance to them. The district court did not abuse its discretion in so holding.

AFFIRMED.

 *

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3

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